This week, the ferrous metals series was in the doldrums, with the average price of steel dropping slightly WoW. In terms of news, the People's Bank of China and two other departments held a press conference on the morning of the 7th to introduce the "package of financial policies to support market stability and stabilize expectations," including multiple favorable policies such as a 0.5 percentage point reduction in the reserve requirement ratio (RRR), an expected injection of approximately 1 trillion yuan in long-term liquidity into the market, and a 0.25 percentage point reduction in the interest rate for individual housing provident fund loans. Market sentiment was somewhat boosted, but after a brief surge, steel futures prices weakened again...

[Commentary on SMM Steel Import and Export Data] China's steel exports surged past 10 million mt again in April! Will May really witness a "Waterloo"? In April, China's total steel exports increased by 0.1% MoM. Although it still exceeded 10 million mt, the growth rate slowed down significantly. On April 9, US President Trump suddenly announced a 90-day suspension of new tariffs on over 70 countries and regions, excluding China, while only raising tariffs on China to a historic 125% (later corrected to 145%). Therefore, the increase in April was more pronounced during the 90-day exemption period for the US, with Chinese export enterprises "scrambling for re-exports". Additionally, there were market rumors at the time that starting from May 1, relevant tax payment certificates would be required for export customs declarations, and the phenomenon of domestic buyers rushing to export remained prominent, keeping the total export volume at a high level.

[SMM Daily Briefing on Coking Coal and Coke] In terms of supply, coking enterprises maintained slight profitability, with an overall moderate production enthusiasm and a high operating rate. However, the shipment of some coking enterprises slowed down, leading to an increase in shipment pressure. On the demand side, steel mills' rigid demand for coke remained, and with coke inventories at steel mills within a reasonable range, some steel mills began to control coke arrivals. Overall, the imbalance in the coke fundamentals was relatively small. However, the market outlook for finished steel products was relatively pessimistic. Additionally, the cost support for coke had weakened recently, and market sentiment turned bearish. The coke market is expected to be in the doldrums next week, with a possibility of price reductions.

[SMM Coke and Coking Coal Inventory: Coke Inventory at Coking Plants This Week Was 285,000 mt] This week, coke inventory at coking plants was 285,000 mt, down 6,000 mt or 2.1% WoW. Coke inventory at steel mills was 2.708 million mt, up 29,000 mt or 1.1% WoW. Coke inventory at ports was 1.52 million mt, down 40,000 mt or 2.6% WoW. Coking coal inventory at coking plants was 2.659 million mt, up 18,000 mt or 0.7% WoW.

The Ministry of Commerce responded again to the high-level economic and trade talks between China and the United States: The US side should be well-prepared and take actions on issues such as canceling unilateral tariff hikes.

[SMM Steel Morning Meeting Summary] From a fundamental perspective, on the supply side, there is a divergence in production profits for construction materials between BF and EAF steel mills. BF steel mills enjoy relatively considerable profits and mostly maintain normal production status. In contrast, EAF steel mills face poor profitability and difficulties in scrap collection, leading to phenomena such as shortened operating hours and production halts at electric furnace plants. On the demand side, construction site operations were hindered during the holiday, coupled with the onset of the rainy season in south China after the holiday, resulting in generally weak downstream demand. Additionally, considering that downstream construction sites had already engaged in stockpiling before the holiday, the pace of procurement slowed during the holiday, leading to a slight accumulation of construction material inventory after the holiday and increased inventory pressure. According to the SMM survey, the total rebar inventory stands at 6.1434 million mt, up 1.65% MoM. Overall, there is currently a slight accumulation of construction material inventory, with demand performance falling short of expectations and market sentiment leaning towards caution. It is expected that construction material prices may maintain a weak and volatile pattern in the short term.

[SMM Daily Briefing on Coking Coal and Coke] In terms of supply, most coking enterprises have maintained profits and have shown good enthusiasm for production, with coke production remaining at highs. Moreover, coke shipments are moderate, and inventory levels remain low. Demand side, steel mills have moderate profitability, and blast furnace pig iron production is fluctuating at highs, indicating good demand for coke. However, steel mills' coke inventory is at a medium-to-high level, and purchasing as needed is the main strategy. Overall, the imbalance in the coke fundamentals is relatively small. However, the market outlook for finished steel products is relatively pessimistic. Additionally, the cost support for coke has weakened recently, and the driving force for price increases is insufficient. In the short term, the coke market may remain stable.

[SMM Steel Morning Meeting Summary] From a fundamental perspective, on the supply side, according to the SMM survey, due to poor profits at EAF steel mills and weakening demand, some electric furnace plants in south China adjusted their operating hours downward. Some electric furnace plants in central and south-west China also conducted temporary maintenance due to raw material procurement issues. This week, the national electric furnace operating rate dropped to 36.52%, down 1.82% WoW. On the demand side, the market enthusiasm for construction materials demand in May waned, and continuous rainfall during the flooding season in south China disrupted construction schedules. Overall, the supply-demand imbalance in the fundamentals is not yet prominent. It will take some time for positive news such as RRR cuts, reductions in housing provident fund loan interest rates, and the advancement of Sino-US peace talks at the macro level to be implemented. The market sentiment is one of wait-and-see, and merchants are operating more cautiously. It is expected that construction material prices may fluctuate in the short term, and subsequent attention should be paid to any changes in the macro direction.